taking a look at the american association for individual investors, and that's also getting down toward oversold levels. >> barry, barbara, unfortunately, ending our show, leave you there thank you for your time today. >> thank you. >> all right. kelly evans, scott walker gonna pick up all this market coverage on "closing bell", starting now. >> indeed. stick around. you are watching cnbc. over to you guys. >> thanks, brian and man ditch i'm kelly evans at the new york stock exchange, with scott wapner. long day. >> scott wapner in for bill griffeth. another big day of huge swings in the stock market. started the day down 200 points on the dow, back into green shortly after noon. bounced back and forth for a few hours now, how many times do we have to tell you, never know what's gonna happen in the final hour, never was that more true than over the past several days and weeks. >> the market's weakening again. the dow off 53 points, well off the lows of the session, we were down 206. but we were in the green just a few minutes ago. so, again, we are going to have to watch things like the russell, things like the nasdaq, which is off 4 1/2 points now,

the s & p down 2. the s & p 1848 to stay in the green for the year. >> i'm gonna point out, like you did the russell, again, significant, right? the people who are watching the market closest keep points to the fact that the russell has been able to get positive and outperform the s & p that's a critical sign. transport, the russell a he is on pace for its first winning week i believe in seven. the transports performing well, too, two key symbols to keep an eye on, try to figure out where the markets are going. >> joining the "closing bell" exchange, diane garrick is here from clear alternatives, darryl crom from wells fargo, bob kaiser, kenny polcari from o'neil securities and our own rick santelli. welcome, one and all. kenny, what about the activity today? in this down we are seeing now what do you think that is about? >> very normal considering where we have been and the action we have had of late, right? the mark let's some violent selloffs the last couple of days. we have tested a new low down at

18, 10, 18, 15ish, did it again this morning. i think it is going to need to do it again before it really starts to believe that maybe that is the bottom. represent 10% off the top, the highs, what everyone has been calling for. coincidental that would be exactly right there, yet it seems to be where it is finding some support. i'm not surprised by this action. i would expect whether it's today or tomorrow, make intoed weekend, see that tested once again. >> bob, what's your read? >> be careful what you ask for, i was on three weeks ago, said i was bullish the next 12 months out, looked like the market was starting to roll over. we thought if the market got down to 1900, be a great buying opportunity. obviously, gone a lot further that anybody envisioned. the some bin nation of rising uncertainty, slowdown in europe, questions around the fed and also a lot of comp place acceptcy in the market two to three years of historically low volatility, all come back to haunt the market a little bit.

we are looking at the market now and saying how long is it gonna take for what remained very fundamental, solidly fundamental u.s. economic kmn condition to come back and restore some order to the marketplace. >> today perfectly sums up some of the confusion out there jobless claims hitting a 14-year low, bob and then what's happening in europe, where we are seeing pressure on the periphery, the inflation number was really, really weak. the credit default spreads blowing out again. how bad is it in europe? is it time to start talking about crisis again? >> europe is, you know, we have heard from draghi now do whatever it takes to defend the euro but not doing whatever it takes to stimulate economic growth within the euro zone. now that the euro is weakening, we are about to get through these bank stress tests in europe, maybe finally see some definitive action to sometime late the eurozone cam through their own version of qe. >> diane, what's your view on where we stand now? is it safe to put your toe back to the water or not? >> great question. a lot of people have been asking

us. we have heard day after day that there are a couple of hedge funds that have been liquidating and lots of people have said, oh that has to be the care let's just figure out which ones. we think there's an equally plausible scenario happening right now. between january and september 30th, quarter end, hedge fund managers have done reasonably well and then at september 30th, they looked at the 20%, their carry that they take home in the form of bonuses. from that moment forward, as the market began to sell off, lots of hedge fund managers just said, look, it's time for us to take that risk off the table, right, lock in our bonuses, make sure that we can bring those bonuses home. >> -- hedge funds being cautious as opposed to being forced to you the of position. why does that matter? >> good question. when they are force the out of position, they are i will liquid dat -- liquidated, out of business and done f they are moving out of risky positions into cash to protect the coveted bonus pool, when the market stabilizes, they

are much more likely to move out of cash and back into risky assets. what that means is as the market stabilizes, look, right now, we have industrial production is great. oil at $82 a barrel. we have employment numbers that are improving. all of these are gonna come together for the market to have great fundamentals. once the market settles and managers are ready, willing and able to redeploy into riskier assets. >> saying amount show you think had the u.s. consumer is fundamentally in better health, the middle class in better health that a lot of people are willing to acknowledge. >> that's true. you brought up some great points as well about europe. remember, one of the reasons that earnings are at risk is because that dollar is so strong. where is the dollar less risky? where is it less exposed? in the russell. and i think that's really important. >> we try and sort of decide whether it's safe or not to buy any stocks at this point. there's a difference and i think it's important to make the difference between a tradeable near-term bottom and the bottom. now, there was a vigorous debate

yesterday in the markets as to whether what we saw early on was true capitulation or not, i said it was absolutely not. >> the halftime today as well, larry oldman was talking about whether he thinks we are put in the bottom here. the dow is down 80. we spoke with a professional day trader are, one of the biggest traders of s & p futures in the world, larry altman, suggested a near-term bottom may be in place, at least for a few weeks. still bearish over the long term. thinks the s & p is going lower than it is today but the environment is one which you can actually buy some stocks. let's list top what he said and react to it on the other side. >> i think you know, this morning, grow will hold for a few weeks and -- >> you do? interesting. >> i would be looking to buy dips rather than sell rallies at this moment as a day trader, but i do think that the bigger picture is that the market's going lower. doesn't mean crude isn't going to rally $3 or $4, but i think pretty clear that the saudis want crude oil down and i think

it's -- it's -- the bull mark it's over for the time being. >> bull market may be over in his opinion for the time being but crude did get a bounce. the point is maybe there is an opportunity here to buy things the next few weeks. >> you know, the s & m needs to hold the 1810 number, hit it in april, hit it again this week, probably test it again. i think the two key factors there are going to be the russell 2000 and the price of oil. and if both of those can hold and diane was right, you look at the russell 2000, only 18% of revenues come from international exposure versus the s and p, which is 40%. a much big exposure in the multinationals than there is in the small caps. so, if oil can hold, even at the $75, $80 level, we actually look at this as more of a buying opportunity than a sell in to the rally. we don't believe the secular bull market is over. we think the u.s. economy is still strong in q 4 and into

2015 as well. >> kenny polcari, larry altman makes an interesting point, i think, speaks to the sentiment of the market, so negative lately that he said you can actually buy the dip more than you can sell any sort of move higher. lately, sell anything that's moved up, not necessarily buy the dip. right, but i think now, and i would agree, if i think 1810 is going to be the level that it holds and i think that seems to be consensus at the moment, i think any opportunity trades down there, that's where you find some support, you're gonna buy that dip and you are -- then you are gonna turn around, sell it into that rally. i do not think that it's gonna break, i don't agree with larry it's going much lower than that i think the damage has been done and it needs to just kind of churn here and i think that's exactly what we are gonna see and gonna build a basin from here and start to repair itself. >> rick, i can't believe nobody has brought up james bullard yet. >> don't wait for me to bring him up.

nothing has been mentioned. >> you can't totally discount the man who he was. >> a non-voter. listen, if you want to talk about jim bullard, judge, you talk about him. >> what he said. why don't you want to talk about it? >> then talk about it i have nothing to add into that. >> why don't you want to talk about it, what he said? >> because i don't look at individuals making the entire difference in the market and that's where you and i differ, judge. there's a whole set of actual fundamentals that the markets are going to have to pay attention to. bullard, yellen, yes, they are important. he is a non-voting member so he really isn't that important. when he grabs a microphone, you pretty much know what he said didn't make any sense. one hand, dropping energy price is good for the consumer but oh, my god, it's deflationary, do more qe? make any sense to you? [ overlapping speakers ] >> falling oil prices do the qe for the fed. >> yeah, why are they falling, judge? why are they falling? >> you bring up a central point here, what i want to talk about, his comments -- >> lack of demand is a big factor and it's not a good

thing. >> doesn't make any sense. all i'm saying, we look to the fed to try to gauge the response here, told us two different things, said the one hand, the drop in oil is bad and inflation expectations he is concerned about the other hand, part of the reason why the u.s. outlook is good. i don't frankly know where that leaves the fed and i -- >> i refuse to be conditioned to have individuals lead me by the nose as to what they think there is a market here. there is a price discovery process here. everything i hear about the middle class, i still question. housing, investors are buying houses. middle class, student loans. i still see all the same issues. i see europe not addressing growth. i see mario draghi out of bullets. i see leadership on the cdc front highly questionable. you know, protocol. it's not like detergent. next week should be new and improved. these are the reasons the market moved. the reasons the market respect moving is those big reasons haven't been updated in the last 24 hours. >> rick, i would agree with you, i think this is a market of she

said/she said, right? we need to hear what janet yellen says. mr. bullard, all the respect in the world, but it's a little non-seine sickal to say you are going to have -- want interest rates to go higher, you want to raise interest rates but extend -- >> for the right reasons. market rates, market rates to go higher for the right reason. you know, how many times today i hear people say, low interest rates are really good. not if they're caused by bad reasons reasons. what do you make of the data out today, nothing about jobless claims, falling, don't care? >> you know, jobless claims is a one-way street. the lower they go, you learn nothing. go the other way, learn something. is it a bad thing, no. i thought industrial production, capacity utilization, stellar numbers. national association of home builder, 59 read last month, an outlier, really coming back in the line. nothing today, what was very negative, also wasn't top tier enough to negate the truly important aspects of yesterday's retail sales.

rick's absolutely right. even one of the pieces of data cited this week for accelerating you the down side was retail sales. everybody said it was weak. last month's all-time record number. the numbers that came out this month were the second best numbers on record for retail sales, year-over-year, up 4%. so, this correction is mostly about the changing macroeconomic landscape. it includes things like crude oil trading lower, the strengthening dollar and the market has to come to grips with what are the prospects for earnings growth and the market in an environment where the market now going to be standing on its own two legs without support from the fed? and in the absence of the next two or three months of data, we gain some insights into how that is, we are focusing on europe. >> you are making a very interesting point though you talk about earnings, this is really key, with earnings season happening right now, many people are worried about this strong dollar but what we are likely to see, this dollar did not really become strong until the fourth quarter. so, companies are likely to beat and then give downward guidance.

so, don't be surprised if we have wonderful earnings and then stocks trading down as a result. >> and we are looking at double-digit earnings growth in 2015 according to consensus data. >> always double digit a year out. comes closer -- >> i will take 8 to 10%, still good for the market. absolutely. guys, europe still seems to be the trouble spot. talk more about that, but for now, we will leave it there with the thanks to everybody and about 47 minutes to go here with the dow trying to make a comeback. i don't know what to call it anymore, scott, off 28 points. green arrow now the s and p and nasdaq and yes, importantly, the russell 2000. all right. much more ahead on these turbulent markets. wharton school professor jeremy siegel is next with his reaction and whether we have, in fact, made a bottom. later, looking to buy some stocks on the cheap? wall street's top money pros will give us their stock picks. keep it here on "closing bell." we will be right back.

welcome back. with the dow trying to turns posttive, send to dominic chu with the market flash. hi, dom. >> hi, kelly, hi, scott, watching the consumer staples sector, weakest sector in the

s & p 500. you can see they are down three-quarters of one percent. there's tyson food to the downside, also kroger, also wal-mart, some of the biggest names in consumer retail on the discretionary, not so discretionary side, the staples side, leading the way, scott, kelly, to the downside. back to you guys. >> dom, thanks so much. told you the markets would be wild the last hour, not joking, the dow down 14 points. i don't know, moving already a wild range in the opening moments of the show. >> looked like we were gonna weaken again. art cashin walked by indicated only 200 million sell orders on the close, lighter than we have seen in recent session and now, the dow is off 8 and potentially trying to make it turn positive just in time for us to talk to our next guest. standing by his call the dow could possibly hit 18,000 by the end of the year -- >> let's bring in now, jeremy siegel, professor of finance at the university of pennsylvania's wharton school. professor, nice to see you

again. >> happy to be here. >> has your confidence been shaken at all by the events of this past week? >> 18,000 a little bit further away than a few weeks ago. short-run predictions have a wide variability. i was listening to the previous segment of your show and i do think it was significant what james bullard, president of st. louis fed, was saying this morning. because i had been mentioning to a few people earlier also the same thing. i had interviewed mr. bullard about a month ago and he was very hawkish on the interest rates and ending qe and beginning the increase in rates. so i was a little bit floored to see, you know, him saying, you know, we may have to put off the tapering and extend it. i don't think he would be alone on the federal open market

committee. let me say the odds are for the end of tapering next month and for rate rises, you look at that fed funds futures market where serious money is bad, they pushed off the first tightening from the spring until the fall and a knew names the last couple of days, it looked even until the winter of 2015. >> but professor, what would shake your confidence truly i think when viewers are see people who come on who have been mostly bullish, certainly in the face of turmoil that we have seen over the last week, there's got to be something out there that would make you question your view of where this market could truly go, real concerns about the european economy, real concerns about where china is, questions perhaps about the true strength of our own economy at home. what is it? >> well, there has been some reduction, not so much in the u.s.

it looks like the third quarter is still gonna be above 3%. early estimates for this quarter are 2 1/2 to 3. these are not far from what is forecast. i mean, we looked at the jobless claims this morning. wow, i mean, that -- that was quite a drop. 200,000-plus workers every month. i think our economy is going along fine. you can't discount the ebola scare. you saw what happened with the sars scare in asia a few years ago, i hope we get this under control, that is my expectation but that is certainly a wildcard out there. if we do get that under control, i see enough strength in this economy to send the market back up toward year end. it has been disappointing in

europe. a year ago, two years ago, i said parity with the dow, maybe not quite that far down. i think if the euro goes down to 1.20, 1.15, you will see a big pickup in europe their competitive position. particularly europe, so much. i think getting the adjustment in currency. we may see a bright per christmas than most of us are imagining at the current time. >> understood. but how much of the outlook for, call it the next six to nine months depends on mario draghi and how much of a risk is there that u.s. policymakers could make an error here in one direction or the other if they are forced to somehow react to what's happening out there?

>> there are always risks out there. [ overlapping speakers ] >> a big risk for the u.s. at this particular point and if it does fall, you know, i see a further fall in the euro exchange rate and that will lower commodity prices more. so, i don't consider that a major risk for the u.s. china has been on the problem list for a while. yeah, their growth is maybe only going to reach 7 1/2%, 6 1/2 to 7%. india's actually looking a little bit better. i don't see them as major risk. ebola is the wildcard out there. and as i said, if we can get that under control, i think we might be surprised on how strong consumer spending might be in this fourth quarter. all right, professor, nice to speak with you, as always. i know we will be speaking with you again soon. professor of finance at the wharton school, jeremy siegel. >> thank you so much. >> yep. we do have about 35, 40 minutes

to go in the trade today. and the dow is still down 12 points. been a wild ride, as you know. >> frankly a little surprised that he and others aren't more concerned about the situation in europe now. are they looking at the data? >> maybe they think that draghi's gonna ride in on his horse and save the day. >> i mean, you have silty basically saying they might have to do qe to start getting bond spreads back down at this point. anyway, we will talk more about it. >> not to mention massive spending which some people want them to do in conjunction with qe. >> right. right. it's not a situation to be lightly dismissed. up next, buckle up, our cnbc all stars will weigh in on market volatility and when and how we might get off this rocky road. we will be right back.

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welcome back. things pretty much paired off for the close, art cashin walked by to indicate markets seeing a little bit of a weaker tone, the dow off 18, well off the lows when we were down about 206 points this morning. europe was another ugly session, as we were just discussing, but here going into the close, major indexes are trying to stem the losses. >> covering all angles of the market today, as you know, with our cnbc all-star panel. joining us now is dominic chu, back at cnbc headquarters, bob

pisani, the floor of the new york stock exchange, bertha coombs at the nasdaq and jackie deangeles at the nymex. bob, a front-row seat to the action all day. what do you make of it? >> it's different than yesterday. once again today, what's similar, we have huge volume, almost twice the normal volume, interesting, but lower price swim, the amplitude is much lower and the volatility is lower. that's very interesting sign. i think that's an important one, the markets settling down a little bit. the problem i have with it, the two biggest causes of, this the ebola concerns and the slow growth in europe, lesser extent, slow growth in china, haven't really changed that much and we haven't really resolved it. that's what makes me think that we haven't seen necessarily the end of this volatility. >> yeah. yeah. >> speaking of volatility, jackie, want to talk about what's going on in crude here? >> you know, a really interesting session in crude and it's a little bit of a which came first, the chicken or the egg here, a lot of people are asking, you know, if crude is following the direction of the equity market or if the equity market is taking some steps from

crude as one of the leading factors. what's interesting here today, we saw this directional rebound and a lot of trade verse been calling for a bottom the last few days, but they said that this is typical buying action, getting back into the market, not necessarily long term, but trading short term. also options expiration. so very likely that traders were bidding up the price of crude to make sure that they were hitting those prices that they needed to hit. on the other side of the coin, a lot of volatility is expected here and while there's been a lack of consensus over the last few days, finally, opinions started to converge today and a lot of people are telling me, they think this is short-lived and they do think that we are going lower from here. so if you're in the school of now the that believe that crude is actually dictating where the market goes, then we may not be at a bottom just yet. >> yeah. no i think that's very good point. dominic chu, you know, i hate to sound like a broken record, but the russell is looking at its third straight day of 1% gain and that's significant if you're

trying to figure out where sentiment is starting to shift and maybe where the market's gonna go. >> how about this? how about the sense that we get from a lot of the traders that we talk to, something along the lines of what jackie just said, maybe a little bit more short term, because when you're looking for an opportunity to trade around this market, we know that right now, the trend looks fragile, but the uptrend for stocks is still intact. where the most damage had been done with regard to the market cap spectrum had been in those small and midcap stocks. as you look for bounces or tradeable bounces to play, the russell 2000 index and the s & p 400 midcap index have been places to play. now, that's one sense of the market. the other sense is the volatility with regards to certain sectors within the market overall. we have -- we all know that energy stocks have been among the hardest hit since those crude prices hit a rent high back in june. we will call it the middle of june. those stocks and material stocks, energy and materials, have been among the most volatile stocks during the recent market volatility and today even, with the markets trying to cling on to gains, you

have energy and material stocks, both up by well over 1%. the two best sectors in the s and p 500. so kelly, scott, as you look toward what's happening with the markets, where traders are finding opportunities are in the stocks that have the most action in this care the ones beaten down the most, the russell 2000 small caps along with energy and material stocks, guys. >> we would be remiss not to put apple in there, too still the biggest story drawing viewers was about i think, either theism phone or ipad, we got another product launch today. bertha coombs, that's why i want to toss it over to you. with that said, apple is under some pressure today. >> apple is under some pressure, you know, kelly, i have an ipad air and already, it feels old, dowdy and fat, now that the new someone 18% thinner. the interesting thing is donald -- dom is talking about the small caps and midcaps. you take a look at the russell and s and p midcap 400, they peaked and hit highs july 1st. the first to see a kind of

violent pullback and this week, they are both on track for gains. part of it is that a lot of these companies, as have been mentioned, have more domestic exposure, they certainly have been beaten up before, but some analysts, some of the traders i'm talking to are saying it's nice to see a sense of maybe a bottoming somewhere. this is one of the areas that people are watching, these small caps and midcaps, maybe it's a little safe to come into the water because they have been beaten up so much. one of the most interesting snapbacks though, to me, has been the chip stocks, chips really peaked later in september. the last couple of days, the real turnaround here and deep into correction territory from their september highs, they are down about 13% over "all. yesterday, intel was not a leader, but overall, the rest of the chips turned around in the afternoon. today, they have been very

strong as well. maybe one of the areas that people are starting to look to see maybe we can find a bottom here, but it's still tentative. >> yes. and we will leave it on that tentative note. thank you, everybody, though as we watch markets a half hour to go dell up 25, the nasdaq positive, s & p holding onto a gain of 1 1/2 points. >> s & p heat map, a true fight between the bulls and bears today, up next, wall street's top pro give us their stock nix wake pum peopling. which are right to buy and which are right to sell? don't go anywhere. back after this. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today.

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welcome back. is it time to buy these begins and if so, just where specifically is the opportunity in joining us now with their picks they say are cheap enough to buy are david nelson from bell point asset management and chris rhettsler from the need ham growth fund. david are you first. >> the markets telling you where

to go, kelly, it you look at yesterday's selloff, near the bottom, chips that turned first with oil service. one name we picked up yesterday that had missed a little bit earlier was ahaving a go. any chip stock that has real estate within the iphone is probably going to do well. this whole tech selloff really started with the microchip. >> microchip. >> then sky works came out and inside theism phone. intel's quarter wasn't bad but the downgrade from morgan stanley more about valuation than anything else. >> what else do you like? pick that one up. what about union pacific? >> hit hard in the last couple days, an upgrade today. csx quarter, that was a great quarter. thing that really encouraged me on the conference call for csx, pricing very strong, i'm exspechting a strong report next

week from unp. >> one of the top performers, up to 2 to 4% in the down market. chris, your picks, where are you shopping? >> we like express scripts, not affected by oil or ebola. it is a drug delivery play on the aging population, a well-run great company. another play that we would look at it is a company called clean harbors, which has been under a little bit of pressure due to the reretyping oil. it is being impacted by the energy dip here, but significant ownership by one of the founders, it had had an activist in there, had issues around that. think an opportunity for buyers to pick away. one-third name, impacted by ebola, unfortunately, air lease, leases airlines internationally,

rarely opportunities to buy air lines on such dips like we did on sar, ebola not an air borne transferral, so, this is probably -- >> why are you picking air lease instead some of the airlines? >> we like to -- air lease is focused on the international air lines so we really avoid the bankruptcy courts in the long term, opportunity to get back. >> a knock on airlines. u.s. airlines have come a long way. >> the argument that they are better businesses. >> i think bet per businesses than european airlines. look, ebola is scary, frightening owning a stock, you have an outbreak. >> do you own some of the air lines? >> i do i own southwest, delta in the past, we have sold delta. southwest is more domestic than most of the others. look, any of us that have flown on an airline realize that every line item has become a profit center. want to taken an extra bag, it's more money. you want some leg room, more

money. want wifi. some air lines that have actually considered, you know, putting in a coin operated toilet on -- >> what's interesting is the one you pick is one of the holdouts in southwest. they have not started charging for every last thing. >> you know something, you hit me by surprise because i did not know that. i did not know that. >> what do you mean you didn't know that? >> i really didn't know that. i swear to god, i did not know that really caught me off guard. i did not know that. i bought it primarily because the numbers have been just been ratcheted up higher, i actually assumed they were doing it along with all the others. >> mr. are some who are suggesting that they are going to have to break that model, which would be -- >> that would be good for me. you really caught me off guard, i have to admit it >> talk after the show. >> what i would on the leasing, looking out seven to ten years, tell me where the u.s. airlines are gonna be, i would rather be leasing planes internationally, i don't know where the u.s. airlines will be.

>> fascinating. both of are you gonna stay right here. back after a quick break with david nelson from bell point and chris let's letter from the need ham growth fund. we have 20 minutes to go and right now the dow jones industrial average is moving lower. it is down by a quarter of one percent. s and p nearly flat, the nasdaq. that small cap outperformance today is certainly something to watch. pay attention to the russell 2000, up 1.25%. >> here's something for everybody to keep an eye on. in the next hour of the show, we are going live to goldman sachs' builders and innovators summit in california. goldman ceo lloyd blankfein sitting down with our carl quintanil quintanilla, plenty to discuss, wild markets, fed policy and goldman's blowout earnings. wouldn't want to miss that all coming up next hour. who's goi? who's going to make it happen? discover a new energy source. turn ocean waves into power. design cars that capture their emissions.

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mall is beautiful. at least lately. morgan brennan takes a look at small caps outperforming the rest of the market. hi, morgan. >> hi, scott, a really rough couple of months for the small caps, the russell 2000, down about 10 1/2% from its july

high, but just take a look at the chart to say that maybe changing. so far this week, the indid exup 3% while the larger indexes are all down in the red? why? after looking, very expensive, relatively expensive much of the year, the steep selloff made small caps cheaper, very volatile stocks but with more than 80% of sales in the u.s. on average, they are mostly insulated from foreign market turmoil and currency swings that are associated with the strengthening dollar. morgan stanley strategist adam parker expects small caps to outperform large caps over the next six to 12 months and jonathan crin ski, chief market technician at mkm partners says he is watching the russell 2000 today to see if it can hold above 1080 which it is doing now and close above 1080, the previous support for the index earlier in the year. if that happen, he think it is could climb higher to 1110, 1120. however, a lot of volatility in the plos circumstance strategist and analysts all agree even if small caps have actually

bottomed, they will continue to experience big swings, so gonna have to pick stocks carefully. back to you. >> david still here with us, along with chris retzler. semiconductors were bullish on semicap equipment into next year, one company called mks instruments we think is well positioned. tsmc announced news last night on their foundry buildout. we think that's good news for them. intel also launched their grantly chip, expected since last spring. and a company like super microcomputing is a real big beneficiary. so it's stock-specific, but we are encouraged that things are

feeling like they are, but i'm not ready to call the bottom yet. >> david, what do you put into this move for the russell over the last three days, if, in fact, we do close up 1%? >> obviously, a trade put on here and, you know, some hedge funds that bought the russell, selling short the s & p 500 and made sense because there was a 1300 basis point gap between the two indices and actually the russell's given back all the outperformance the past five years. here's where it gets kind of sticky. go back 14 years and start to look at a long-term chart, small caps are still 100% above what large caps have done. i think up 236% since 2001 versus about 135 for the s & p 500. that's lot of fluff in there that could unwind. i think there's some individual stocks and maybe a trade in here, a reversion to the mean trade but a long-term investment right now, i'm not there i'm not buying the index. >> not there on the russell? >> not gonna buy the russell

blindly, stocks could you buy. >> do you think a bottom put in here, broadly speaking? >> i wish could i tell you. i have been drawing lines in the sand and charts, just like everybody else, on the back of a napkin. each time i have to terror down. i'm up to the new, new, new line in the sand. i don't know. this is gonna take months to walk out of this. we are not gonna have a v-shape, all of a sudden, go right back to the top. it will be tough to get back to my original target for the year 2000. >> 2000 even? wow. thank you, guys. leave it there now. david and chris, appreciate your perspective on all things micro and macro, 13 minutes to go here, scott. the dow off about 13. >> all right. coming up, wall street pro, david rose.berg, backs up his claim that the pull back is almost over. but the bull market is not. >> and perhaps helping turn things around, art cashin indicated there had are 300 million now to buy on the close. the s & p's positive, the nasdaq positive, and live to goldman sachs builders and innovative

summit next summer, speaking exclusively with lloyd blank fine. find out if he thinks the market has hit bottom, where he these economy going and a whole lot more. we will be right back. you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds would go with a merging markets. it's a masterpiece. thanks. clearly you are type e. you made it phil. welcome home. now what's our strategy with the fondue?

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welcome back. back on the floor, a picture of the market, ten minutes to go. joining us now is kathy wood from arc investments and frank argentine know from jhs capital advisers. guys, great to see you. kathy, you first, how does this market feel to you, where do you think it is going from here? >> i do think it is going up. i think that people are beginning to understand that a fall in energy places is actually good thing, not a bad thing. it's a huge tax cut and i also think people are looking at earnings and sales and despite all of the bad headlines, surprising on the high side of expectations. >> really think, you're saying that the bottom is in? >> it feels like it to me. i mean, you never know. an ebola scare, if there were -- if there were airborne virus if it mutated into that, it would be a problem. other that that i'm feeling really good about this market. >> wow. interesting just given where we have been and the violence and volatile that we have seen. do you agree? >> i think we are in the process of making a bottom. what we see out there, low

interest rates, low inflation, stable corporate earnings, oil prices have come down dramatically, pinch me, i could be dreaming. >> people looking the what's happening in the bond market, causing more worry. >> what's happened in the bond market is everyone in that crowded energy trade ran out of there and ran into bonds, now all that money in bonds right now that eye eventually are going to rotate back into equities. >> if you think a bottom's in, what are you buying? >> well, we are buying innovation and we are really happy to see the way the russell 2000 is acting now. it's really coming out very strongly. so, our funds, our q and w are all about industrial innovation, robot ticks and 3-d printing and batteries, tesla, electric vehicles as well as web x.o, anything internet, mobile internet is really taking off. >> got positive across the board, the dow moving back into positive territory, eight minutes, seven minute or so to go are you a buyer in the market

or waiting? >> i am a buyer. you can start buying here, make this bought bottom. the items, i like the russell bounce, think a good play but again, momentum money that needs to try to outperform the market, gone into the russell now, it was most beaten down. i think the areas you want to look at now are dividend paid value stocks, dividend-paying stocks, you compare the dividend yields to seen on treasuries, more yield, the next ten years, much more upside in dividend stocks outyielding the treasuries. >> we did not even have a 10% move in the s & p, yet you guys are comfortable in thinking that the correction is over? >> well, you never know until -- until it's over, right? but it's feeling as though people are beginning to understand, earnings are surprisinging on the high side of expectation, i think europe's been a big concern for people and this whole energy price to climb has fed that worry, are we in a deflationary bust again? the fixed income market is not telling us that we are.

if you look at the broad fixed income market. one other thing about the notion of deflation, confusing a lot of people now. there's bad deflation, like we saw in '08, '09, good deflation, energy places i would include in that, but there's also technology-related deflation. and we think a lot of that is taking place and messing up the inflation numbers and people are confusing bad deflation with good deflation. >> scott, i'm not certain that the bottom is completely put in but we are working on it not going to be a v bottom, more days like today, we start with bad news and down market and we recover from that. so more days like this are going to be what really lead us to putting in that bottom. it's time more than anything else. i think going forward, you have a large possibility of a small gain between now and the end of the year, much more likely a large possibility, a small possibility of a large loss. so i think you can be a buyer here and ride it out into the new year, because those energy prices will help going forward. gonna help us, gonna help europe, who needs low oil prices, more so than we do.

so, they are in trouble over there, we all know that but those low energy prices help them for sure. >> i think a great point, the last point. energy prices holding interest rates down, a support for the multiple in the market. again, innovation, i think, it supports that as well. i think if you look at the market with the equity risk premium where it is today, where it was in '11. you can get in today, people who think they missed the bull market, you can get in today and probably do pretty well over time. >> see you guys sticking around for the closing count down a fight to the finish in terms of whether the dow can finish in positive territory. right now, remains negative while the s & p, nasdaq and russell 2000 are positive. the russell is the outperforming, going for its third consecutive day of a 1% or higher gain. and google is out with earnings after the bell. don't forget that gonna bring you the numbers as soon as they hit the tape. very much set the tone for how friday's trade goes. you're watching cnbc, first in business worldwide. blach

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it's in this spirit that ingu u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement. welcome back. we are on the floor of the new york stock exchange a few minutes ago, before the "closing bell" rings, dow is once again negative, see from the board i have next to me, s & p nasdaq trying to work into positive territory, a fractional loss, really at the bottom, a lot of investers are keeping a close eye on. that's the russell 2000, the small caps, which since the summer, have gotten so beaten up, now looking at their third

straight day of 1% gains or more. keep an eyen attism wm, the small cap etf, what a lot of professionals are watching to try and get a grip on where this market may be going from here and there it is you can see that move toward the end of the week, but again, working on three straight days. back here with kathy wood and argentine know. why do you think people should pay attention to the russell, people focused on it as something to keep an eye on? >> think the small cap part of the market was the first market this summer to signal that we might see some turmoil. and, you know, i think everybody was wondering, know, when is the middle east and russia and all of the bad news, when is that going to much catch up with us? small cap started signaling quite a while ago. to see them come out of it as a leading indicator, we think is very important. >> frank, small caps tend to lead on the way down. they tend to lead on the way up, who knows if we've really put in the bottom, maybe we have a

tradeable bottom. >> you're right, scott, we do have a tradeable bottom. i think the small caps are much more of a growth story than anything else. [ "closing bell" rings ] >> could be looking the oil right now to see oil, those lower prices may impact the growth and give us more going forward. thanks, second hour of "the bell" begins right now. >> i'm kelly evans. it's been a wild couple of weeks for the market here. google earnings expected at any moment. here is how we are finishing up on session on wall street. going out of the close of the dow to the down side, the s and p looks like it is going to join as well. the dow off 35 points. thesome and p down by maybe 1 point here, closing at a level around 1862 means we are still in the black or in the grape for the year on that index, 1848 is about where we began the year. the nasdaq adding about two points there the russell, the one we are watching, of course, seeing if it can hold up 1.25%.

bring in today's panel to talk about it and get those new earnings from google as soon as they hit with mike san tolly from yahoo! finance, chris whalen here from pearl bond rating agency and very up michelle -- michelle caruso-cabrera. where is -- there -- also, more on today's markets, "fast money" trade steve grasso will join us when he is off the floor in just a couple of seconds. mike san tolly in a word, if you could, what did today's action tell us? >> exhale briefly. high yield did okay. the stuff that needed to bounce bounced. small cap energy up 4%. i think it's kind of a plausible trading low from yesterday and then this morning. but i don't think you really determine anything today except the selling pressure eased up maybe because of that fed comment. >> surprising, michelle, how much we came back after an ugly open in europe. >> things really started to improve. we got bad inflation data, like no inflation data out of europe. i think bottom line this week is going down as the week where the world figure it out, wow, the

ecb just hasn't pulled it off, not sure they will be able to pull it off, there had to be a who whole readjustment. we have had massive sellings, markets off. have they priced in enough? here on out, we wait to see subsequent data to tell us is it flattening, getting worse, go to do something finally? >> what do you think, chris? >> when you get past the volatility and the shock of the move in the treasuries, i think what it tells me is we were always headed back to 2%. we just did it much more quickly than anybody expected. you have all these dead presidents looking for yield. i don't see how anybody in the hedge fund community or the policy community could expect rates to go up. i don't think the fed could make rates go up if they wanted to >> 56-56 economists, go back to this poll, might have been ours, rates are going higher because the u.s. outlook --

>> they are economists. market people, the banks and non-banks we have been rating, look at the execution. >> haven't they had to position for higher rates? haven't policymakers been telling them you better be ready? >> the policymakers in this case are saying one thing and doing another. when you create as much liquidity as we have in the market today, you know, look at the corporates, buying back stock, leffering up, you know, look, dick fisher, the dallas fed, saying this for months, he is right. and i think unfortunately, the economists, the sell site firms, keeps trying to sell the higher rate scenario because they make money on it but i think really, if you're sitting on a corporate board today, you should not be assuming higher rates, the next year. >> hold that thought, everybody. google's earnings are now out. morgan brennan joins us with the numbers. hi, morgan. >> hi, kelly. here we go, non-gap earnings, 6.35 on a revenue of 16.52 billion, which represents a 20% increase year on year. however, missing analyst expectations of 6.53 on 16.57

billion dollars. volume of those clicks increased 17% year on year. that's missing analyst expectations as well of 23.5% increase. also, cost per click or cpc, that is decreased 2% versus last year and holding steady from the previous quarter. analysts were expecting a decrease of 4%. so, a minor beat there. revenues, the breakdown sites, 11.25 billion in revenues. analysts expecting 11.36 billion. networks, 3.43 billion, analysts were expecting 3.46 billion and other 1.84 versus 1.79. so, top line, bottom line miss. a miss on paid clicks, but we did see better-than-expected decrease in costs per click. taking a look at shares of google right now, we are down about 6% for class a in the after hours. back to you.

>> morgan, thank you. just before we get to our analysts, guys, google misses, i mean, steve, you want to comment on this? >> i certainly do, but unfortunately, i actually added to my position in the middle of the day. it's so binary with going approximately. either gonna be a 500 print or a 570 print. so, i sort of knew what my odds were here, but i could not help myself. a bet on google is a bet on the marketplace. >> a bet amount u.s. -- a bet on the global economy. >> google has actually missed 5 of 8 quarters. stock tends to react okay to it and by the way, options were implying 6 1/2% move, about what we got. cost per click was what everyone was looking at. if they can stem that slide right there, that's bullish scenario for google. >> but is google a surrogate for retaining generally? >> yeah. >> the whole thing? so what do you interpret that? >> for me, i think the bigger question is mike started off

this debate when you have tech, you have utilities, those are the names that people have been buying, they have been selling the energy, material names, we saw that massive unwiped this week. the question is how many of those firms that were in trouble are already unwound? >> exactly. i just -- this is amazing to me, i want to get reaction from a couple of a lists on google specifically, david geraghty, adam cuss ler. david gear rattlety, what do you make of the numbers? >> in terms of looking at the numbers, obviously, the disappointment with the secular bottom line but indicate you had a very high percentage of revenues coming from outside the us and a strong dollar in the quarter. apart from that, looking at their own network revenue, up 20% year over year, non-google revenues hurt them, up only 9%. one thing positive to look forward to the negative pressure on their price per click from the trip to mobile search wasn't as bad as people thought. and from that standpoint, i think the stock is actually set up well going into year end around holiday shopping season

advertising you. >> we see it off 3 1/2% after hours now, was off almost double that a few minutes ago. aaron kessler, agree, even though there was weakness here, not as bad as some had feared? >> core revenues roughly monitor their estimates, eps slightly lower. take into account the fx, which weigh on the revenue growth a little bit, think most investors had folk count core google revenue growth. and i think do you have some easing comps throughout the rest of the year here. and i think current valuation around 15 times earnings and 13 times cash, valuation support at these levels. >> robert luna joining the conversation here as well, robert. what jumps out but to this report? >> yeah, you know, i completely agree with the other guests, really a lot of it, kelly, priced into the stock now, the stock trading about 15 times earnings. that's 17% growth on clicks. that's really the disappointment there. but i think you have to look further at ancillary revenues

from google. google is one of these companies that, you know, another guest was talking about innovation. you talk about leaders in innovation, that's exactly where google's at right now. some of their margins pressured by investments they have been making, employee overhead, areas like nest, google fiber as they are entering the home but google, in my opinion, kelly, is clicking on all cylinders and i was looking at, we own the stock already but looking at any selloff, adding aggressively to our position in the morning on google. >> okay. fair enough. again, i mentioned, shares coming a little bit off their lows in response to that. but i guess just becomes a question of like we do with the macrodata to what exstent is this weakness priced into google shares and what extent a tell here there's some softness for their number? >> broadly for the market, going to be the question of when these kind of blue chip performers actually do register as being cheap enough. and i think not yes. you can talk about it sort of being 15 times earnings, seeming like a market multiple. if the real money doesn't sort of come into that and say we

have kind of finally found a bedrock value point, i think that's the issue the market has in general, yes, we have sold off, we have gotten oversold, but came from expensive to not as expensive. >> what was interesting are, saw during the selloff, apple didn't get cracked, they had their event day today, that was one of the reasons why it couldn't be sold off, people were willing to pull the trigger really quickly on google, which was a -- didn't add up to me. monday after the close that sold off after hour, almost like it was factored in, why i think you're probably okay to enter google at these prices now, a lot has been factored. >> want to go black here to david gerhardty. figure out whether google is cheap enough what are you looking for in terms of their performance, are they losing share to anybody? is there any kind of execution story here, just a transition story to mobile? >> not an execution story here, there is a transition story to mobile. i think the case can still be made, despite the economic weakness people are concerned about, google's a name that can still grow earnings, better than

20% rate through 2015. stocks now trading down about one times its growth rate, which historically is its low. i would say people come in tomorrow and basically, they have an opportunity to buy a quality growth, like a going, going into the holiday, year-end shopping season, gas prices are going to be down, consumers arguably are going to be spending, you know, ebola notwithstanding, god forbid. but from that standpoint, google a he is a good, solid name to add at these levels. >> aaron, same question, we talk about how the nasdaq digests this, how names tomorrow might act, is there anything else here that makes you change a thesis? is there anything about weakness? is there anything about mobile softness across its competitors to be concerned about? >> yeah, nothing yet. i think as eric commented the other day, google the biggest competitor as amazon in the market, we think is true, think google's expansion of google shopping express, as a competitor that may become an issue for competitors, mob al

tailwind than a head wind so far and do expect mobile pricing to improve. you still have some pickups along the way here but we think overall, google hitting the right direction, solid growth story and investors want to see margins stabilize to slightly improve on the margins, show eps outside again. >> going back to the strong dollar issue, steve, people who are looking at the currency shove moves and thinking i do need to wait until this shakes out before i get involved with a name like google, yes or no? >> it doesn't -- i spoke to colin gillis today, been a real good analyst on gaggle, he has been on point and he was worried about a little bit of the currency fluctuations here, i think people also worried about them spending money. hear about drones, hear about google express, what i haven't heard on this interview has been the regulatory headwinds, where does that fit in? i think more worried about that than anything else. what startled me, i read through this whole release, all about clicks, clicks, clicks and i associate so many other things with google now, driverless cars, maps and everything else, get right down to it it's

clicks. >> number wasn't bad. >> people try to do things other than what they do well. like google plus, the music offering, you know, you just go down the list. interesting, right? drones, okay. but it's ultimately -- >> how about youtube is really the diamond within google. >> totally. >> they are so comfortable in the market position, core business, allowed them to experiment everywhere else and maybe the market is looking at this h. >> the flip side is google always say to certain companies, you need to reinvent yourself, need to self-destruct, always be thinking about the next thing, et cetera, et cetera. >> this is a mature company. >> right. why they need to -- >> tenth anniversary as a public company. they should be running it more and more like microsoft, i hate to say. >> leave it on that quote. >> dividends. give us the money back. >> guys, thank you now. be sure to stick around. coming up with the rest of the crew and "fast money" at 5, be

sure they will talk more about google. also knelt flicks with one analyst standing by, his buy rating after that stock tanked more than 20% on earnings. don't miss it it was another nerve wracking day on wall street. more of our special market coverage when we come right back. later, talk about the market and earnings with goldman sachs ceo, lloyd blank type. exclusive interview with our carl cquintanilla right here. how do you beat the number one seed?

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welcome back. the s & p managed to eek out a small positive, as things shook out here, not the case of dow, reported the sixth losing session, the first such streak in some time, off 25 points today. dominic chu, how close are the major indexes to correction territory now? >> bring you up to speed on the numbers you will want to watch. given the marginal losses we have seen for the dow and the marginal gapes for the s and p, we are a little bit further away from that correction than we thought we were going to be earlier in the session. look at some of the large numbers. gonna start with the dow jones industrial average. you look over here, we closed today about 16,117. in order to get to correction territory, 10% drop, have to get down to 15,615. that's the number you will want to watch there. on the s and p, closing at 1863.

1817 is the 10% drop from its record high. so, that's another level to watch for thesome and p. and the nasdaq, 4217 where we closed, well before the 4149, a 10% correction. put this all in perspective as to how far are we away from those levels at current levels. take a look at the russell 2000 index, up a percent today, over a percent, means overall, still call it not in correction territory any more. 9i 9i 9ish%. nasdaq, no longer in correction territory, cycle through the s and p and dow, s & p 500, call up -- flat. but again, not yet in that correction ter territory 2 or 3% away, same thing with the dow jones industrial average, you look at that right here, you can see 1085.81, up for the russell

2000. the dow two 2 to 3% away from correction. today's moves helped a little bit in that selling pressure.we still saw some losses, but we are just not that close away from where those correction levels r back to you. people will find either reassuring or not depending on their point of view, thank you very much, dom chu bab at headquarters. bring in an institutional trader at o'neil securities, one of the earliest female seat holders at the big board. welcome. >> dating me. great to have you here. so listen, just heard dom off correction levels, index levels, off 2 points on the dow today. >> huge volume, 10 billion shares overall traded in equities. i think that's kind of encouraging for a good day. i'm not necessarily feeling things are over. i think there's too much headline risk still in the market. i think ebola, although we have talk it had preetzty so much death, i think there's still a lot of risk in the effect that is going to have on the economy. people should know there is a lot of focus on ebola on the floor here.

explain whether you think that's rational or not. >> i think it is rational. harvard took a poll over the summer, asking about people's fear levels of ebola, 40% of the people said they were worried during the summer. i can only imagine now what they must be feeling. must be heightened to 75 or 80% of people. >> wondered if the cdc was one of them, response frankly has not indicated any kind of level of panic until now, guys. >> it absolutely hasn't. it is going to take its toll. when my 18-year-old son says to me last night, i don't think we better go out to dinner, then i have to say to myself, i think maybe there's a real -- something real underneath. this >> crucial, right, not whether or not we get the pandemic, the epidemic, just if people worry that it might come and you look back to what happened in hong kong during sars, i mean, people didn't go to the movies, 50, 60% dropoff in participation, it was huge, terrible impact on revenue. >> how do you feel about getting on a plane now? >> absolutely not going to get on a plane. i think that's pretty -- you see

the picture today of the woman in the hazmat suit? people have a real level of fear. speaking of fear. this market, isn't it kind of becoming a familiar cycle where we have an event, thing trades off hideously and they all rush in and buy it, both equities and imz' thinking of high-grade corporate debt, those spreads blew out, got to believe people are buying it with both hands, right? >> i thank you a lot of people looking for a big rally going into the end of the year, october traditionally feel, oh, it's october, it's october. this is gonna happen anyway. someone said to me yesterday you don't even seem worried about it, i said after nearly 40 year, you have seen it several times. so it's not really so threatening, but i think this time, i think the headline risk is more real that it has been. >> you mentioned the heavy volumes, been days of extremely heavy volume. what is your sense of what that is coming from? is it really big reallocation trade, people looking to, you know, lay off risk here, comment do so anywhere else? >> i think risk is the key. i think one of my institution

a.m. guys said to me today, he has seen a lot of midcaps did well today. he saw a lot of people selling midcap etfs and going into treasuries. so i think that was, you know, that shows you it is a reallocation. didn't this start a week ago, even longer when the spread started weakening on the both the high yield and the blue chips? growth that people were talking about, lack there of? >> i think also a tremendous amount of money amount sidelines. people have been waiting for an opportunity like this to get in where stocks crack and here we go. a lot of managers been looking for this to happen so that they can help their performers. performance not terrific across the board. >> you get a sense, pressure, the hedge fund space, for example, an opportunity for other people looking for a 10% call it discount for some of these names? >> i think there is an opportunity here. i think you have to be selective, as we have seen with some earnings being good and yet stocks not doing very well. i think do you have to be stock selective. >> doreen, great to hear your

perspective. thank you so much. the wall street mayhem, as you heard, continued today but up next, david rosenberg saying the recent selloff is nearly over and the bull market is alive and well. he is gonna join us next for a special market coverage and later, what does goldman sachs ceo, lloyd blankfein, make of this market? coming up, he joins us from the goldman builders and innovators in summit. be right back.

david rosenberg, it is great to see you. which willen, i know you've been more positive on this whole cycle. is it because the u.s. economy is strong? aren't you worried about europe? >> i'm worried about europe, but unless it turns into a conta da john. large cap multinationals have their earnings affected by the strong doll land the weakening economy over the eurozone. the impact on the overall economy here at home is going to be negligible. >> you think, david that we are going to -- what is you are your next price target if you do get that specific for stocks here the

then? >> clearly that was a one-time thing, although it coincided with the retail sales data, there was clearly some, you know, massive capitulation move taking place, some margin call causing large-scale selling of equities. i think to cover redemptions and high yield and a big safety bid into the treasury market, but you see how many that lasted. i mean, almost all that rally has since been reversed. my sense is that, you know ex2% 10-year treasury notes were only there because you've got some 1% yields over in germany. of course, the trend there is moving in the other direction, but we have imported to a large extent that dramatic decline in bond yields, you know, it's not much different than when we had

the asian crisis of 1997, '98, the u.s. economy did just fine in that period. again, we imported a massive decline in interest rates during that timeframe.

you had 100-basis point rally, the markets will increaselying determine the global market, not just the domestic market. we have jobless claims now comfortably below 300,000 the economy is running i would say roughly 3% growth. those alone will not tell you 2% amount ten-year note, a lot driven by what's happening outside our borders. we could keep this going, we have to leave it there. thank you so much for coming in and giving us some context on that. david rose rosenberg, saying bull market airport over. up next, live where we are going to ask this ceo, lloyd blankfein, exclusively about his firm's big earnings feat this morning. you know how fast you were going? about 55.

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welcome back. goldman sachs holding the third annual builders and inknow rate issers summit in santa barbara. our carl quintanilla at that conference. he joins us live with lloyd

blankfein, chairman and ceo of goldman sachs in an exclusive interview over to you, carl. >> thank you so much. here at the cop friends and you saw the numbers from goldman earlier today, 457 obviously blew past estimates, revenue surprise to the upside, fixed income trading, first revenue gain in over a year, gaining market share and m and a, lloyd blankfein of goldman sachs joins us here in santa barbara. great to have you. >> good to see you, carl. >> calling this the breakout winner of earnings season so far. >> that's good. going to break out, getter to break out on the high side. but it's been a long haul. >> charge drove the quarter? >> again, a return of volatility, also a return of confidence, what we saw in the u.s. and if we were having this conversation a few weeks ago, i would say better gdp performance around the world, better confidence and i would say at this point, it's pretty much better in the united states and not better in very many other places but still, the united

states is an important market for us. that kind of confidence creating more transactions, more m & m, more financings, more financings, more securities, more securities, more securities trading. >> i remember a time the narrative for the quarter was the inverse of that you said volatility was drying up to such a degree that was a problemsome that chapter now over? >> the chapters are never over. >> these are cyclical. i was thinking a few minutes ago that people were bemoaning the lack of volatility, not so much vol at this time, but the lack of risk premium, the inability to separate the good from the bad because not premium attached to things and wishing for it a little bit like the genie in the bottle. you wish, you wish, you wish, all of a sudden, we have an avalanche of volatility. a little bit beyond what people were hoping for.

>> on the conference call, your ceo said wednesday was a painful day for your client but nothing is fundamentally changed, structurally changed, in the global or the u.s. economy. did wednesday reveal some underlying weakness in the markets or the economy? >> i would say it -- never sure of these things have to look back, you don't know. i'm sure a painful day for some i think the interesting thing is a pullback was highly anticipated and people -- people that you interviewed were not only talking about it was anticipated and necessary but that it would actually be welcomed. of course, even a welcome anticipated thing happens like that it's jarring, because when it happens, it doesn't declare itself a brief pull back. it actually represents a shift in sentiment and everybody bemoans, they wonder how could i have been so duped in the run-up to this and they have changed their mind until sentiment shifts again. so it's not dish say the

storyline has gone one from where the world's economies were playing, things were getting better so traced and positions were lined with that increase in m and a, increase in deal flow, long equities, long dollar, long commodities that are going to be used in people's businesses as the economies replay to one where the story is now deflationary. none of those things are going to work anymore, interest rates going so low, because the economic activity is never going to be there and never have inflation again. and so that's kind of the new story, probably either of those two extremes are wrong. if is on a path in the mild. >> a lot of hedge funds were positioned just the way you said and i wonder, do you foresee a liquidation, mass liquidation of hedge funds? do we compare those to long-term capital scenario? >> i don't know. i think a different world now hedge funds in general are less leff rammed, less rajjed but much less than before and

successful hedge funds in the risk management business for a long time and especially the ones that you survived these other crises like all of us who survived crises, learn the lessons and take them with us. i think the risk management skills are there. this is a big event, one-day event, these things go on a long time, could be worse. obviously, a lot of pairing of positions, which is responsible for the big move and, you know, near record fleece we have seen in some of these markets but i wouldn't get hyperbolic about t >> you think europe is going into deflation? >> i would say it's a concern. look, the deflationary concern has been evidence even in the united states that's driving policy, because even when we are growing at near, you know, trend growth, there's a concern that, you know, that all is not right, not all the numbers are right. in fact, good number, bad number, good number to bad number and that the consequence of slipping back into deflation

are very, very extreme, because what tool does we have left to reverse that? gonna have another fiscal stimulus? take interest rates a lot lower from here? better to play it on the safe side and insurance and keep rates lower longer until it's firmly established. that's in the u.s., where we are at least half a cycle ahead of europe. in europe, a lot of the restructuring, you know, remains to be done. rates need to be -- additional problem in europe and also what the market is focused on, there's a real divergence in thinking much the structure isn't the same. the decisionmaking process and protocols in the u.s. to evolve a policy, in europe, that isn't well established. >> you mentioned fed policy. today, james bullard made some comments that have people thinking that qe four may be part of an active discussion or that you taper the taper. would it surprise to you see that kind of policy extended beyond what people expect?

nch>> at this point, i think th fed is committed, not giving them advice on this. i think they have done some, take than position, despite a lot of criticism, think the last few years, people were harping on them how inflationaries their policies are, there is no inflation, don't have enough inflation, people talking a critical way, some people, gone well past the point of enough growth, we should have reversed. now, people are speculating, so i would say they have handled it right, in some ways, courageous, everything goes well, turns out they needed, didn't need to be this low for so long. 'caused's like an insurance premium that they are paying and i think that they have been wise and courageous and subject themselves to second guess. u.s. economy is established in good shape, on from here,

everybody will second guess them sand say you shouldn't be in this life too long. >> some argue that regulation has removed the bank's ability to act as a stabilizing force. is that true? >> maybe to some extent, not sure myself, clearly there are consequences to attaching a lot costs and restriction and limitations on the inventory you can hold and capital you have to hold against various risks you have, i can't say that was the dominating factor here, part of it is just the world view, all of a sudden, people got a very deflationary sense of how things r i think there's another thing worth looking at, too, which is a lot of this trading has been routed to electronic exchanges, which are kind of driven by algorithms and certain things there's elements of the mark that's are starting to look at, like, elements of the equities market, automatic orders are put

in you get gappy kinds of moves, see nag in a treasury market compared to, ironically, maybe less efficient in some ways but of the and more orderly market where dealers with a sense of responsibility to their client stand in and smooth out the flows. so i think that's an element that also, the sociology of the market has moved, not just the regulation and maybe they are related. >> ebola. mark it's been handed this, you know, potential downside scenario, extreme down side scenario of a public health crisis. without a short-term solution in sight. how is a reasonable investor supposed to manage that risk? >> i think it's very tough. i think you have to, you know, first of all, we shouldn't, here's this word again, i don't think we should be hyperbolic and crazy about this. we shouldn't, you know, blow it out. of course, look, i'm not world of worrying about low probabilities, i remember when we were wore worried about sars, which, of course, didn't manifest into anything big it could have and we didn't know, we were actually going and war

gaming surveys and studies of what would happen, who would we have operating from home, who would come into the office, does go through a region, path to another region, the people in the first region could now go back to work or is it everywhere at once? we look at these things, like we contingency planned a lot of things, i wouldn't let -- i wouldn't let -- i wouldn't overdo the ebola virus and i wouldn't try to create another virus of fear that just has its own life to it, you know, when people all of a sudden are afraid to mingle in the public or get onto, we are not there and, you know, if all you do is turn on the tv set and that's what anybody is talking about, i can see how fears play on you that,'s a virus itself. >> the builders and innovators summit, doing this three years. >> yes. >> bring together emerging entrepreneurs, seasoned entrepreneurs. do the emerging ones have a thematic ribbon running through them? >> you know, they are all

different industries, builders and innovator, some quite established, household names, you know some of the names of the emerging builders and innovators, the entrepreneurs. businesses have a lot in common, they need financing, they need confidence, they need how to assemble teams, they need to deal with it through adversity, they need to deal with bad earnings, need to deem with recalcitrant investors at times like them to deal with a path hot innovator himself the core conviction doesn't. they have to have passion and they have to harness that passion in a sensible way. so, when we bring this group together, they have a lot to talk about with each other and then we bring a generation of entrepreneurs who are very well established and both sides love it because they -- the established entrepreneurs live that cycle that they went through. any play it out and give pressen tying the younger guys who ask question, i stay is very virtuous and get to fulfill our

role as convener and bring these guys together. >> having it on a week like this dealing with a shift in sentiment we are just talked about, got to play into the discussion, i imagine? >> of course. carl, i think it's an aberrational period where sentiment doesn't shift for a very long time. i think that was the aberrations. it's not like we are hoping for these things to happen. we are just expecting them to happen, new facts introduced, facts, circumstances, conditions, like it or not, change the market-clearing price of everything, how people look, what people think, their view of the future. don't forget the price of something is the stream of all future -- the future discounted to the present, that changes all the time, those adaptation and those transitions have to be managed through a price discovery practice, frankly, what we hope to do >> lloyd pa, great seeing you. thank you for your time. lloyd blankfein. tomorrow, we will talk to david solomon, the co-head of investment banking and george lee, the head of tmt here from goldman's builders and

innovators in summit in santa barbara. see you later. >> carl, already generating a lot of interest, that interview. thank you very much. our carl quintanilla with lloyd blankfein out at the builders and inknow rate issers cop friends with more to come tomorrow. up next, the panel's reaction to the interview with lloyd blankfein. stay tuned. we are back in two. she inspires you.

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some thoughts from the panel? >> listening to him say nothing. >> he was politic. >> what a goldman sachs' banker might have said in the 1930s, real leadership from wall street, jesse jones, bernie baruch. >> what kind of leadership is needed? >> he accepts current policy as being sufficient. the fed had rates low before the crisis. we have rates low now. there's been no change in policy. and the notion that we don't have to do any more, i think that's part of the reason you saw the selloff. and so the lack of leadership from people like lloyd blankfein, who is a very smart guy, who understands finance intimately, he is not willing to challenge. >> let me quote him a second. he said the consequences of slipping back into deflation are extreme what tools do we have to fight that? fiscal stimulus, qe.

he there is out there >> my point, there are other tools, nobody wants to talk about t. >> what are the other tools? >> debt reduction, okay? nobody wants to hear cut debt. that's why europe is foundering. >> you mean telling italy you have got to restructure and bond holders -- >> even in this country, slowly restructuring, the strength of the united states. we still have 10, 15 million households in this country under water. >> the bank does take leadership in that, mike? >> absolutely. i wouldn't expect them in this context to try to lay out something that was a little bit sort of provocative that way, but what did interest me, actually, was how he very delicately agreed with the idea that regulations that kind of bound the hands of the marketmakers out there >> did he agree with that? >> used to be when, you know, the market was a little more orderly, when it was by phone, maybe less efficient, but now you have these gaps. >> he slipped that in there when he was talking about how the computers lead to the gapping. >> not just the computers. it's we are not allowed to

deploy capital. >> also a touch of sad innocence his voice. goldman was the prime broker for the london whale, okay? that volume is gone, now a passive portfolio, jpmorgan does not make markets around his treasury anymore, nor do any of the big bank that's you why see these gaps. >> did he at the core acknowledge because of things like the volcker rule, not have as much inventory, the gapping? we saw? >> there's no support in the market on bad days. years ago, we get the dealers go into the market on bad days. today, wouldn't you say that that's just too cozy or something? >> no, we have created the -- i have said this on the show before. we have created the circumstances for really bad days and we had them this week. >> mike, you were gonna say? >> i do think lloyd blankfein, you have to operate in the world we have right now. so, goldman sachs, okay, fine, you want us to put less capital

there, you want to penalize us for doing the market making, do less of it, going to have a lower roe business, pay our people a lot less, all that's happening, be a lot more of an agency-type business and hope investment banking comes bang in huge way so they canback. >> r.o.e. is a reference on return on equity. one last thing he could have done is actually come out and say to europe, you have to fix this. you have to do something. >> that's right. >> we didn't hear that. >> he expressed why. because you have 18 different countries in the eurozone who don't agree with the policy is. >> the pressure has to come from somewhere. >> pressure is building. that's why you have seen spreads. the lack of leadership. the second step after you throw money at the problem, you have to restructure. that's how you get job growth. >> and they could do something more proactive there. we have to jump. we'll be right back after a quick market break. amid the market turmoil apple unveiling a new ipad and more. was it enough to impress the apple faithful? we'll be right back.

welcome back. apple unveiling its latest ipads, macs, and operating system at an event in cupertino. josh lipton was there. hi, josh.

>> the ipad still does account for 20% of apple's revenue. today the company did introduce new versions of that device. first the ipad air 2. now, this is a lighter ipad. it's thinner, a better camera. it also has certain features that iphone users have come to expect. so a touch i.d., for example, and it will be compatible with apple pay. the ipad air 2 starts at $499. apple also unveiling the ipad mini 3 at $399. preorders start tomorrow and those ipads will ship next week. also today apple introducing an i-mac with retina display. 14.7 million pixels. it's $2,499 and starts selling today. apple's ceo tim cook talked about the strong demand that apple is seeing for these new iphones. in fact, that iphone 6 will go on sale in china starting tomorrow. we did catch up with cook after

the event, and we asked him which iphone he's using, the 6 or 6 plus. >> what i do is i use both, and i'm going back and forth, and it's the toughest decision i ever had to make because i love both of them. >> now, apple did tell us they sold 10 million of those new iphones in just the first weekend. that was a new record. kelly, back to you. >> all right, josh. thank you for now. consumer sentiment, housing starts out tomorrow. the market sold off majorly on disappointing economic data yesterday. will we see a repeat? we'll ask the panel when we come right back.

welcome back. stocks rebounding today after a wild day yesterday. the dow still off 25 points. it was six-day losing streak. the vix still elevated. guys, is the worst behind us? >> impossible to say. the overnight markets will determine that. we're in these intermarket, overnight moves. macro matters a lot more. i think a lot of people will look at the vix spike, went over 30, back down again. a lot of models say that's a tentative all-clear but i think it's a matter of seeing how overnight trades. >> what's the most important earnings? >> i think it's how the credit

markets behave basically. >> michelle? >> i'm going to be watching european data for the next couple weeks to see what happens. i think a lot has been priced in. tomorrow morning there's an austrian economist member of the ecb who will be speaking in the morning. only thing perhaps more frightening to the markets than a german member of the ecb might be an austrian. >> my nationality or philosophy? >> and we should remind people it was the data this morning. if you want to talk about inflation, flash cpi gauged the headline, 0.3% for september. 0.3%. you already have several major countries. >> five countries in deflation already. >> as we talk about it, if fr s spreads continue to widen, that's a bad sign. spreads can tightened considerably but i think there's doubt now because people are looking at the fed and saying what's next? >> but is the u.s. fed ultimately going to have to respond -- >> no, it's not the fed. it has to be from elsewhere. it has to come from congress. it has to come from a lot of

these -- >> good, i'm sure it will then. that's one place we can count on. >> if you continue to see spreads, especially on really high grade debt not come back in, then we have a problem. >> we'll leave it right there, everybody. thank you so much. this hour on "closing bell." "fast money" begins. live from the nasdaq market site in new york city's times square, this is "fast money." i'm mel sa lee. steve grasso, jon najarian, karen finerman and brian kelly. the conference call for goiogle is under way. an ugly day for netflix. remember when rich greenfield cam on the show after upgrading the stock. >> netflix is competing every night for your time and attention. do you turn on the dial and turn on the traditional television or do you click on